Which Wage and Hour Laws Apply to California Public Employees?

Wage and hour laws require that employers pay minimum wages and overtime wages, provide meal and rest breaks, and pay all wages immediately upon termination of employment, among many other things. Public employees often wonder whether they are covered by these laws, or whether such basic protections do not apply to them.  The answer in California, in true lawyerly fashion, is, “it depends.”  This post will attempt to sort out which wage and hour laws apply to public employees and which, unfortunately, do not. (more…)

Arbitration and the California Supreme Court:  A Glimmer of Hope in Melendez

Corporations in recent years have made great strides in their efforts to hijack the American system of justice and force workers out of court and into mandatory arbitration.  Their hope is that arbitration is such a stacked deck (and often it is) that workers will choose not to try to enforce their rights.  They also hope that the “repeat player” phenomenon will give them a decisive advantage in terms of the results.  Sadly, all too often that is the case.

However, there are signs that some judges are beginning to realize exactly what is going on with mandatory arbitration-and what a travesty it is. (more…)

Unpaid Wages and PAGA: A Third Approach in Zakaryan v. The Men’s Wearhouse

On March 28, 2019, a third California Court of Appeal weighed in on the issue of whether California employees who have signed arbitration agreements can bring claims under the Private Attorneys General Act (PAGA) for unpaid wages.

To set the stage, in Esparza v. KS Indus., L.P. (2017) 13 Cal.App.5th 1228, the Fifth District Court of Appeal held that a PAGA claim can be split, and that PAGA claims for unpaid wages under Labor Code section 558 can be sent to individual arbitration.   In Lawson v. ZB, N.A. (2017) 18 Cal.App.5th 705, the Fourth District Court of Appeal disagreed, holding that employees can bring those PAGA claims on a representative basis in court.

The Second District Court of Appeal has now weighed in on this issue in the case of Zakaryan v. The Men’s Wearhouse (March 29, 2019) Case No. B289192.  In that case, the court agreed with Lawson for the most part, but added this interesting twist:  Of the unpaid wages recovered, 75 percent must go to the State, and 25 percent to the workers.  In reaching this holding, the Zakaryan court relied on the fact that Labor Code section 558 was enacted before PAGA.  Therefore, PAGA’s later-enacted rule regarding the distribution of civil penalties recovered under that statute must control. (more…)

Is calling in to check your work schedule considered reporting to work?

Predictive scheduling laws have recently received a great deal of attention. Although California is considering passing statewide predictive scheduling laws, individual entities like the City of San Francisco have already enacted similar legislation. The push for predictive scheduling is to provide workers with stability and predictability by allowing them advance notice of their work schedules.

Similar to predictive scheduling laws, the Wage Orders require employers to pay employees that are required to report to work but are not permitted to work. In the past, courts have interpreted “reporting to work” as being physically present at the workplace. However, is using modern technology, such as cell phones, email, and the internet to report to work considered “reporting to work?” An appellate court addressed this question in Ward v. Tilly’s, Inc., 2nd Appellate Dist. Case No. B280151 (filed Feb. 24, 2019) (Ward).

Facts of the Case

In Ward, the Plaintiff was a sales clerk for the clothing chain, Tilly’s. In additional to normal shifts, Tilly’s assigned certain employees to “on-call” shifts. These shifts provided Tilly’s with the ability to quickly increase or decrease a store’s staffing needs.

Each on-call shift had a specific start and end time. An employee assigned to an on-call shift was required to contact Tilly’s two hours prior to the start of the shift to determine if he or she needed to work. An on-call shift was considered a scheduled shift until an employee was informed that he or she was not required to work. An employee was disciplined if he or she did not contact the store before an on-call shift, contacted the store late, or refused to work an on-call shift.

Procedural History

Plaintiff filed a class action alleging that Wage Order No. 7 required Tilly’s to provide reporting time pay for on-call employees that were: 1) required to report to work but were provided less than half of their usual or scheduled day’s work; or 2) required to report to work a second time in a workday and provided with less than two hours of work. See Cal. Code regs. tit. 8, § 10070, subd. (5) (Wage Order No. 7).

For the first violation, an employee is entitled to “half the usual or scheduled day’s work” which cannot be less than two hours, but cannot exceed a maximum of 4 hours, at the employee’s regular rate of pay. Wage Order No. 7, subd. (5)(A). For the second violation, an employee is entitled to two hours of pay. Id., subd. (5)(B).

Plaintiff alleged that on-call employees “reported for work” when they called Tilly’s to determine if they were required to work. Therefore, Tilly’s violated Wage Order No. 7 when it did not provide on-call employees, who had their shifts canceled or shortened, reporting time pay.

Tilly’s argued that the act of calling in by telephone did not qualify as reporting to work. In order to “report to work,” an employee must be physically present at a Tilly’s store. The trial court agreed with Tilly’s interpretation of “reporting to work,” and sustained Tilly’s demurrer without leave to amend. Plaintiff appealed the trial court’s dismissal order.

Appellate Court’s Ruling

On appeal, the Second District Court of Appeal held that on-call employees calling in to determine if they were scheduled to work qualified as “reporting to work.” The appellate court emphasized that the purpose of the Wage Order’s reporting time requirement is to ensure that employers provide proper notice of work schedules and compensation for employees.

The appellate court gave the following reasons for its ruling. First, permitting employers to schedule workers to be ready and able to work, without actually compensating employees for this time, discourages employers from making competent scheduling decisions. Without reporting time pay, employers are incentivized to keep a large pool of contingent workers on standby for staffing shortages, but able to prevent individuals from working without financial consequences.

Second, on-call schedules impose major costs on workers. Workers are prevented from using their time to pursue higher education, forced to spend resources on child or elder care arrangements, and prevented from earning additional income at another job. On-call workers must incur these expenses, even if an employer chooses not to allow them to work.

Third, Tilly’s requirement to call two hours prior to the start of an on-call shift prevents an employee from using this time for his or her own purposes. The employee cannot schedule time with family members, engage in personal activities, or travel to areas without cell phone service.

Conclusion

The appellate court’s ruling was based on a 2-1 decision. Justice Egerton dissented and held that an employee must physically appear at the worksite in order to “report of work.” Although the appellate court held that an employee under Tilly’s on-call policy reported to work, the court declined to make a blanket ruling that an employee “reported to work” anytime that he or she contacted an employer to check his or her work schedule.

If you have questions about reporting time pay or your rights in the workplace, please feel to contact Hunter Pyle Law at (510) 444-4400 or inquire@hunterpylelaw.com.

Are taxi drivers independent contractors under Dynamex’s ABC Test?

Whether an individual is an employee or independent contractor has become a hotly disputed legal topic. This classification is important because independent contractors do not receive employment-related protections, such as the right to minimum and overtime wages, the prohibition against discrimination, and workers’ compensation.

In Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) the California Supreme Court provided a new method for determining if an individual is an employee when pursuing claims under California’s Wage Orders. Following Dynamex, an appellate court analyzed whether taxi drivers are employees under the new ABC test articulated in Dynamex. See Garcia v. Border Transportation Group, LLC (2018) 28 Cal.App.5th 558 (Garcia).

Facts of the Case

In Garcia, the Plaintiff was a former taxi driver who worked for the Border Transportation Group, LLC (BTG). BTG’s business model was to lease out taxi permits through subsidiaries to drivers. BTG’s lease agreement expressly stated that Plaintiff was an independent contractor. Furthermore, Plaintiff’s vehicle contained a BTG subsidiary’s, Calexico Taxi, color scheme and logo. Last, BTG permitted Plaintiff to set his own work hours, use the taxi for personal errands, keep his own fares, enter sublease agreements, and advertise under his own name.

Procedural History

In 2014, Plaintiff sued BTG, and other related entities, for various wage and hour violations and wrongful termination. The wage and hour violations included claims for unpaid wages, failure to pay minimum and overtime wages, failure to provide meal and rest breaks, failure to furnish accurate wage statements, waiting time penalties, and violations of the Unfair Competition Law. The trial court granted summary judgment in favor of BTG, and held that BTG did not exercise the requisite control required to establish an employment relationship. While Plaintiff was appealing the trial court’s order, the California Supreme Court decided Dynamex.

Appellate Court’s Ruling

On appeal, the Fourth District Court of Appeal applied Dynamex’s ABC test to determine if Plaintiff was an employee or independent contractor. After applying the ABC test, the appellate court held that summary judgment was inappropriate for Plaintiff’s Wage Order claims. To support its ruling, the appellate court discussed the differences between the old control test applied in S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 38 Cal.3d 341 (Borello) and the new ABC test in Dynamex.

The appellate court noted that under Borello “[t]he principal test of an employment relationship is whether the person to whom the services is rendered has the right to control the manner and means of accomplishing the result desired…” Borello, supra, 48 Cal.3d at p. 351. In addition to control, other factors are considered, such as:

1.   whether the one performing services is engaged in a distinct occupation or business;
2.   the kind of occupation, with reference to whether, in the locality, the work is usually done    under the direction of the principal or by a specialist without supervision
3.   the skill required in the particular occupation;
4.   whether the principal or the worker supplies the instrumentalities, tools, and the place of    work for the person doing the work;
5.   the length of time for which the services are to be performed;
6.   the method of payment, whether by the time or by the job;
7.   whether or not the work is a part of the regular business of the principal; and
8.   whether or not the parties believe they are creating the relationship of employer and            employee. Garcia, supra, 28 Cal.App.5th at p. 567.

The new ABC test differs in key aspects from the control test. Under the ABC test, an individual is presumed to be an employee unless the hiring entity establishes each of the following:

• (A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
• (B) the worker performs work that is outside the usual course of the hiring entity’s business; and
• (C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed. Dynamex, supra, 4 Cal.5th at p.957.

The appellate court focused on Part C of the test. Part C analyzes whether the worker has actually chosen to go into business for himself or herself. To satisfy Part C, it is important that an individual is actually engaged in an independent business, not that the fact that an individual had the opportunity to pursue such an activity.

In Plaintiff’s case, his taxi permit was limited to providing services for a specific company. If Plaintiff chose to provide services to a different company, he would need a new permit bearing the new company’s name. Furthermore, BTG did not provide evidence that Plaintiff provided services for other entities or operated an independent business. Thus, summary judgment was inappropriate because BTG did not meet its burden to establish that the Plaintiff engaged in an independent business.

Conclusion

Although the appellate court held that Plaintiff may be an employee, it limited its ruling to Plaintiff’s Wage Order claims. The appellate court emphasized that because Plaintiff’s claim for wrongful termination was not related to a Wage Order, Plaintiff failed to establish that he was an employee for the wrongful termination and other non-Wage Order claims.

If you have questions about whether you are an employee or independent contractor, please feel to contact Hunter Pyle Law at (510) 444-4400 or inquire@hunterpylelaw.com.

The Ninth Circuit clarifies the requirements for standing in FCRA cases: Spokeo 2

On August 15, 2017, after remand from the U.S. Supreme Court, the Ninth Circuit issued a second opinion in the case of Robins v. Spokeo, case no. 2:10-cv-05306-ODW-AGR (Spokeo II).  Spokeo II clarifies the requirements for standing under the Fair Credit Report Act (“FCRA”).  At the same time, it leaves open two critical questions that will need to be resolved by future litigation. (more…)

Perez v. U-Haul: Employers cannot compel arbitration of standing issue in PAGA cases

Some companies continue to try to force employees to arbitrate their individual PAGA claims before bringing their representative PAGA claims in court.  Two appellate decisions make it crystal clear that California courts have rejected these efforts, and that workers are not required to litigate PAGA claims in multiple forums.

By way of background, in Iskanian v. CLS Transportation, the California Supreme Court held that employers could not compel plaintiffs to arbitrate their representative PAGA claims.  In the wake of that case, some defendants began to argue that where workers had signed an arbitration agreement, they should be required to arbitrate their individual claims before proceeding with their representative claims in court. (more…)

Morris v. Ernst & Young -The Ninth Circuit Follows D.R. Horton

In an important decision for workers seeking to join together to enforce their employment rights, the Ninth Circuit Court of Appeals ruled in Morris v. Ernst & Young (https://cdn.ca9.uscourts.gov/datastore/opinions/2016/08/22/13-16599.pdf) that employers can not impose concerted action waivers in mandatory arbitration agreements. The Ninth Circuit held that employers violate Sections 7 and 8 of the National Labor Relations Act (“NLRA”) by requiring employees to waive their right to participate in “concerted activities” such as class and collective actions. With Morris, the Ninth Circuit joins the Seventh Circuit (Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016)), which was the first federal Circuit Court to adopt the National Labor Relations Board (“NLRB”) position in D.R. Horton, Inc., 357 NLRB No. 184 (2012).

In Morris, employees filed a class and collective action alleging that their employer had misclassified certain employees as exempt from overtime in violation of the Fair Labor Standards Act (“FLSA”) and California labor laws. These employees were required to sign agreements that had a “concerted action wavier” that required them (1) to pursue legal claims against Ernst & Young exclusively through arbitration, and (2) to arbitrate as individuals in “separate proceedings.”

The Court explained that:

This case turns on a well-established principal: employees have the right to pursue work-related legal claims together. 29 U.S.C. § 157; Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978). Concerted activity – the right of employees to act together – is the essential substantive right established by the NLRA. 29 U.S.C. § 157. Ernst & Young interfered with that right by requiring its employees to resolve all of their legal claims in “separate proceedings.” Accordingly the concerted action waiver violates the NLRA and cannot be enforced.

Although the Federal Arbitration Act (“FAA”) creates a “federal policy favoring arbitration,” it also has a “savings clause” that allows courts to refuse to enforce arbitration agreements that interfere with or defeat rights provided by other federal laws – federal rights such as the right to engage in concerted activity under the NLRA. The problem with Ernst & Young’s arbitration agreement was not that it prevented employees from proceeding with their claims in court, but that it forced workers to waive their right to pursue claims collectively under the NLRA or other federal laws, such as the FLSA. As Chief Judge Thomas explained:

The same infirmity would exist if the contract required disputes to be resolved through casting lots, coin toss, duel, trial by ordeal or any other dispute resolution mechanism, if the contract limited resolution to that mechanism and required separate individual proceedings.

Other circuit courts have taken a quite different position and have enforced employers’ concerted action waivers under the FAA. See Cellular Sales of Missouri, LLC v. N.L.R.B., 824 F.3d 772, 776 (8th Cir. June 2, 2016); Murphy Oil USA, Inc. v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015); Owen v. Bristol Care, Inc., 702 F.3d 1050, 1053-54 (8th Cir. 2013); D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 361 (5th Cir. 2013); Sutherland v. Ernst & Young LLP, 726 F.3d 290, 297 n.8 (2d Cir. 2013).

The U.S. Supreme Court is likely to take up this important issue now that there is a split of opinion between the Circuit Courts.

Commonality, Damages, and Representative Evidence:  The Ninth Circuit Properly Cabins Dukes and Comcast, and Underscores Tyson Foods

Over the past decade or so, higher court rulings regarding class actions have tended to dramatically favor either corporations or workers.  Corporations have arguably scored the most significant victories.  However, with the recent exit of Justice Antonin Scalia from the United States Supreme Court, there are some indications that this tide has begun to turn.  At the same time, it is clear that a Republican victory in November 2016 would return a conservative majority to the Court, and devastate any positive momentum in terms of workers’ rights.

Vaquero v. Ashley Furniture Industries, Inc., No. 13-56606 (June 8, 2016), a recent decision of the Ninth Circuit, is a good example of the type of decision that we can hope to see more of in the future.  Vaquero does three important things.   First, it properly limits the scope of Wal-Mart v. Dukes, 564 U.S. 338 (2011) with respect to the issue of commonality.  Second, it limits the impact of Comcast v. Behrend, 133 S. Ct. 1426 (2013) in wage and hour class actions.  Finally, it underscores the critical holding in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016) that plaintiffs may continue to rely upon representative evidence to prove both liability and damages.  As such, Vaquero provides powerful ammunition for workers and their advocates in class actions. (more…)

Representative Evidence May Be Used to Prove Class Action Wage Claims

In a case of national importance, the U.S. Supreme Court ruled that workers could use representative or statistical evidence to prove their claims for overtime under the Fair Labor Standards Act (“FLSA”). Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016) (“Tyson Foods”). The case involved workers at a meat-processing plant in Iowa. They claimed that Tyson Foods did not pay them for the time they spent putting on and taking off (“donning and doffing”) protective equipment for their dangerous work, or for the time they spent walking to and from their workstations in the plant. At trial the workers used a report from an industrial relations expert to show the amount of time they spent donning and doffing. The expert had done videotaped observations to find out how long these activities usually took and then averaged the times. The average times were added to each employee’s timesheets to determine which employees worked more than 40 hours per week if their donning and doffing time was taken into account. The trial court accepted this evidence and the jury awarded the workers $2.9 million in unpaid wages.  (more…)